Japanese Communist Party Central Committee Chair FUWA Tetsuzo visited China from Aug. 26-30 at the invitation of the Communist Party of China. In Beijing, he held a summit meeting with CPC General Secretary Jiang Zemin (president of China) to discuss a wide-range of international issues and gave a lecture on "Lenin and the Market Economy" at the Chinese Academy of Social Sciences.

LENIN AND THE MARKET ECONOMY

Lecture by FUWA Tetsuzo
Japanese Communist Party Central Committee Chair

August 27, 2002
At the Chinese Academy of Social Sciences, Beijing

Fuwa Tetsuzo, Japanese Communist Party chair, gave a lecture on "Lenin and the Market Economy" at the Chinese Academy of Social Sciences in Beijing on August 27. The translation of the lecture is as follows:

Good morning, everyone. I am Fuwa Tetsuzo. This is my first lecture outside Japan.

It is a great honor for me to visit the Chinese Academy of Social Sciences and speak to researchers from various fields.

I am going to speak about "Lenin and the Market Economy." I have chosen this subject because it has something to do with both China and Japan in a broader sense.

The Communist Party of China adopted a policy of developing a "socialist market economy" at its Congress 10 years ago. But even before that, China had addressed the subject in practical terms.

And you are now pursuing the road towards "socialism through a market economy."

Japan is in the middle of the capitalist economy. The JCP envisages achieving socialism in Japan through stages. The course we will follow will be "socialism through a market economy" or a "combination of the planned economy and the market economy. "

We will see new historical developments and also face new problems for the theory and practice of scientific socialism.

Lenin was the first communist to address the question of the market economy and socialism.

From 1998 to 2001, I was engaged in research on "Lenin and Capital" and wrote about 40 articles which were published in a magazine in serial form over a period of three years. This was in an attempt to examine Lenin's theoretical activity from his younger years.

One of the major theoretical questions he tackled in his last three years until he fell ill in 1923 was the question of the market economy and socialism.

Marx and Engels are founders of scientific socialism and our great predecessors, but they never had a chance to work on the question of building socialism as a practical issue. I don't think they ever carried out theoretical research on the question of the relations of the market economy and socialism, not even from the theoretical viewpoint.

So Lenin was the first communist to take up the challenge. He had to face many difficult problems arising in the course of his study and even underwent a 180-degree shift in his views. A review of such painstaking efforts by a predecessor, I think, will teach us an important lesson that will help us study present-day problems.

Lenin rejected the market economy in the early stage of the revolution

Looking back on Lenin's activities, you will find that nothing entered Lenin's mind concerning the use of the market economy following the victorious October Revolution, Russia's socialist revolution.

While he was engaged in economic construction following the victorious revolution, he firmly believed in the principle that socialism and the market economy were incompatible with each other. This attitude grew even stronger during the war against foreign intervention and counter-revolution.

Lenin's concept of the communist economy was about industrial production at the state-run factories and grain harvest by peasants, with all grain surpluses being collected by the Soviet central authority state for distribution to the people. This way was believed to help achieve the country's industrial development and enable the Soviet authority to provide peasants with tractors, fertilizer and other necessary supplies, although the country was experiencing hardships due to the war. This being the policy at the time, the "market economy" or "free trade" was regarded as a symbol of the enemies of socialist construction, a counter-revolutionary slogan. The biggest task of the Communist party was to have the people, in particular the peasants who had been used to the market economy, abandon their inclination to favor the market economy.

This policy, later called "war communism," lasted until early 1921.

Adoption of 'New Economic Policy' to pave the way for better relations with farmers

However, this policy caused antagonisms that were difficult to solve on the ground. Farmers were ready to endure hardships to some degree during the war against the counterrevolution and outside intervention, but once Soviet Russia defeated these enemies and achieved peace, the farmers' discontent erupted causing riots in some localities. In Kuronshtadt, a naval port near Leningrad (the capital at the time and known as a stronghold of the revolution) even the revolutionary sailors rose in revolt. In those revolts they called for "free trade" or "freedom to trade."

Lenin took this dangerous situation more seriously than any other political leaders of Soviet Russia at the time.

The major question was how to improve the socialist government's relations with the farmers. How is it possible to establish a worker-farmer alliance, essential for making progress towards a new society? Lenin's statements and articles during this period show clearly that he took pains to find the answer.

Remember that even Lenin believed that the "market economy" was a counterrevolutionary slogan, and you will understand that he needed to exert courage to make the difficult decision to accept a market economy.

The New Economic Policy, NEP, began in March 1921. It is often referred to as being synonymous with the acceptance of a market economy. This is not correct. Although he put forward a drastic change, Lenin initially could not go so far as to recognize the market economy; he looked for a reform without adopting a market economy and adopted an "exchange of products" policy under which peasants bartered corn for industrial goods and other products of the cities. It did not achieve good results.

After six months of soul-searching, in October 1921, he arrived at the conclusion that the adoption of a market economy is necessary.

The announcement of this conclusion, which Lenin worked out after taking great pains, had great repercussions in the party.

Documents from a Russian Communist Party conference at the time (Lenin's report and closing speech), which are available in Lenin's Collected Works show clearly how extensive the turmoil was. A member in the discussion said, "They didn't teach us to trade in prison." Another complained that communists cannot be involved in the very unpleasant job of trade. In the concluding speech, Lenin criticized these views, saying that it is inexcusable for revolutionaries to give way to dejection and despondency.

Toward 'socialism through a market economy'

That was how Soviet Russia began to study the market economy. In short, the discussion on the market economy was prompted by the policy of improving the government's relations with peasants after the victorious revolution.

Once Lenin made a decision to take this course, however, he immediately began to work on this issue in more detail and developed it into a major policy that would have an important bearing on the destiny of the Russian Revolution and socialism, namely, a path toward "socialism through a market economy."

Documents at the time show that it marked a very impressive development. I think that the new policy consisted of a number of pillars.

First, it concerned the establishment and development of a socialistic structure that would not lose in competition with capitalism in a market economy. Lenin used the Russian word "uklad" for what I describe as structure. I'm afraid there is no Japanese or Chinese equivalent for "uklad."

Secondly, the market economy under certain conditions would allow private capitalism to emerge and develop as well as foreign capital to make inroads. This also marked a very important development.

Up till then, the market economy was regarded as the "enemy," the reason being that it would give rise to capitalism even from among small commodity producers. That's something the Russian Revolution could not tolerate.

Thirdly, the new policy called for the key elements of the economy to be preserved as part of the socialist structure. Lenin called these core elements the "commanding heights," a military term used at the time to mean that in an era when cannons were the main arms in war, occupying heights overlooking the battlefield was vital to winning the war.

Two years ago, we had the IT minister of Sri Lanka among the foreign guests attending the JCP Congress. I was a little bit surprised when he said that they are trying to take control of the "economic commanding heights." I said, "I haven't heard that phrase for many years." Then he told me that he had studied in Moscow when he was young.

Fourth, the new policy called for Russia to learn everything advanced capitalism could offer so that the socialist structure could gain economic power.

Fifth, the new policy also referred to peasants. It said that the future organization of peasants in cooperative unions must not be carried out by order from above or by coercion; cooperative unions should be organized based on the voluntary will of the peasants.

The Soviet Union broke it off five years after Lenin's death

In March 1923, 17 months after completing this plan, Lenin fell ill and died in January 1924. Stalin rose to power after Lenin's death. As the leader of the Soviet government and the Communist Party, Stalin from 1929 to 1930 carried out the so-called "agricultural collectivization" as a means of forcibly collecting grain from peasants.

To begin with, the NEP was intended to improve the government's relations with the peasants. So the top-down "agricultural collectivization" policy meant an end of the NEP. Since then, the policy of achieving "socialism through a market economy" never made a comeback in the Soviet Union.

Several decades later, when the Soviet Union was under the leadership of Mikhail Gorbachev, the "introduction of a market economy" was much discussed. But during the preceding 60 years the Soviet Union completely changed itself. Substantial changes took place in the socio-economic system of the Soviet Union during and after Stalin's era. In effect, Soviet society had already become a system in which socialism or even a direction toward socialism was non-existent.

No country has run through this course

So I think that " socialism through a market economy," which China and Vietnam are attempting, is a strategy that no country has ever experienced.

In my speech at the meeting to mark the 80th anniversary of the JCP this past July, I talked about motive power that gets the world to move forward in the 21st century. In that speech I cited what China is attempting to do. I said as follows:

"Although the Soviet Union is gone, projects of socialism associated with Lenin are not. There are countries tackling new projects of socialism, including China, Vietnam, and Cuba. 'Socialism through a market economy' pursued by these countries is precisely what Lenin proposed but which was thrown away by Stalin. This is a path no one has ever traveled through, so there will be many unpredictable difficulties down the road. I have no doubt, however, that results of this trial will have a great impact on the course the world will go through in the 21st century."

What is to be done to set this path toward socialism?

This being such an important issue, there will be a variety of theoretical questions that need to be studied.

Let me just comment on two points.

One is the question of what is to be done to make the path of a market economy successful as a way to achieve socialism.

In analyzing what the path of "socialism through a market economy" would be like, Lenin stated in detail that the economy would involve cooperation and competition between various sectors: socialism, state capitalism, private capitalism, and small commodity production. He also made many original suggestions concerning necessary steps for taking this course to achieve socialism without having to return to capitalism. I think that in the present-day world we can learn many things from what Lenin suggested.

Lenin first and foremost stressed the importance of strengthening the socialist sector through competition in the market so that it can be strong enough to be competitive with capitalism in the market. From this point of view, he also attached importance to learning from capitalist at home and abroad as much as possible.

One of the slogans Lenin put forward was, "to be a good trader one must trade in the European manner."

This apparently was a tough slogan for those who complained, "They didn't teach us to trade in prison." Lenin meant to say, 'To be able to trade is not enough; you must be more skillful businessmen than European businessmen.'

Another slogan Lenin put up was, "test through competition between state and capitalist enterprises."

We should note here that the call for the socialist sector to "beat capitalism" is not confined to economic advantages such as the question of productivity and economic efficiency.

Lenin wrote an article that called for workplace safety to be as good as the best of capitalism. In other words, Lenin's slogan, "Beat capitalism," involves such issues as the environment and pollution. The idea is that socialism should exert superiority in all areas.

Secondly, regarding the "commanding heights" that holds the key to the country's economy. The state must have firm control of the socialist structure so that it will be set as the direction of economic development. When Lenin discussed the importance of the "commanding heights," he was referring to the socialist state taking control of the greater part of the means of production in the industries and transportation. I think that this was an opinion Lenin had under the particular circumstances of Russia at the particular time. What the role of the "commanding heights" is a question that should be explored in accordance with the historical conditions of the country in question.

Thirdly, regarding the defense of society and the economy against negative phenomena the market economy will produce.

The market economy, anarchical and competitive, is like the law of the jungle, which is the source of greater job insecurity, unemployment, and social income gaps. The market does not have power to control such contradictions. Such contradictions can only be controlled through social welfare services and other social security measures.
Although Lenin made no significant remarks on this issue after the adoption of the NEP, I just want to touch on an interesting historical episode. The world's first principles of social security were stated in a declaration issued following the October Revolution by the revolutionary Soviet government. These principles later had a great influence on the capitalist world in that they laid the foundations of social control of negative effects of the market economy under capitalism.

I must point out that the negative side of the market economy is that it gives rise to greed and corruption. Public bodies are required to firmly maintain the principles of socialism, but if they are contaminated by various kinds of corruption, bureaucratism and autocracy will prevail. Aware of this problem, Lenin repeatedly emphasized the importance of popular supervision and inspection along with the self-discipline of public bodies. Thus, Lenin in his later years particularly stressed the need to raise the people's cultural levels and enable each individual to fulfill their responsibilities.

I would like to say one more word. In the present-day world, capitalism's major issue is a choice between accepting the market economy as panacea or placing the market economy under social or democratic control. By and large, the tendency to view the market economy as almighty is clearly represented by the U.S. Bush administration, and the call for democratic control over the market economy is manifest in many European countries. This issue involves a number of global economic issues such as environmental destruction, social disparity and the economic independence of each country.

I am convinced that the important subject of future research from the historical context will be to prove that countries and their economic systems striving for socialism through a market economy will demonstrate their superiority to promote social progress.

What will the future market economy be like?

The other point I want to raise as a subject of study is something more theoretical and concerns the future. It's about the destiny of the market economy. When the combination of the planned economy and the market economy successfully achieves the goal of socialism, will the market economy perish or survive?

I touched upon the negative aspects of the market economy, but a study of the market economy from the perspective I have just mentioned will make it clear that it has some important economic effects that cannot be replaced by other methods or mechanisms.

Take the function of the market economy in adjusting demand and supply.

You may be able to estimate the demand of shoes in a country without having to use market mechanisms. But, when it comes to demand for particular types and colors of shoes, you will have to count on market mechanisms for a long time to come in areas like this, even if you use a computer with high performance.

Likewise, the market's judgment is useful in assessing or comparing labor productivity or corporate performance.

In dealing with the question, "how much more value does skilled labor create than unskilled labor?", Marx said that it is measured by the market mechanism. In Marx's words, such value is determined by a "social process" behind the producers. What he meant was that there is this aspect of market mechanisms.

It is very suggestive that the Soviet-style planned economy turned into a complete fiasco in this regard, as shown clearly by reports delivered by Khrushchev during the 1950s and 1960s at the CPSU Central Committee meetings.

At one point, he stated that in the Soviet Union achievements of productive activities are measured by the weight of products; producing heavier chandeliers is evaluated as better job performance; heavier chandelier may increase the enterprise's earnings, but for whom?"

On another occasion he said: "Why is furniture made in the Soviet Union so unpopular? It is because factories are producing heavy products. Foreign-made furniture is lighter and easier to use. In our country, achievement of production of most machineries is measured by the weight of products. Twice as much iron as that needed for machinery platforms is used; that way may enable the factories to achieve their goals, but they are only making products that can't be of any use. We need to establish new standards to measure achievements of factories."

Such was the Soviet Union's level of study on standards for evaluating economic results 30 years after it abandoned the market economy.

We have an interesting experience in relations to this issue.

After the U.S. war of aggression against Vietnam ended and peace was restored there, we sent a delegation to Vietnam to study the Vietnamese economy and give them advice on economic reconstruction.

The delegation visited farming districts. As you know, they grow rice in paddies. To assist in the mechanization of Vietnam's agriculture, the Soviet Union had sent in rice transplanting machines to Vietnam. Being a product of the Soviet-style planned economy, they were very heavy machines, so heavy that they sank into the mud of the paddies. The Vietnamese felt obliged to use the gift, and decided to use them by attaching two boats on both sides of the machine to prevent the planting machines from sinking. They could plant rice seedlings all right, but the attached two boats pressed down the rice seedling just planted. They finally decided to stop using those machines.

This example shows how difficult it is to find a substitute for the market economy as a system to improve labor productivity and efficiency of economic activities.

This question was not on Marx's mind. In Capital Marx stated that the concept of value remains in communist society. However, we cannot use this remark to speculate that he thought that the market economy would continue to be valid too. If the concept of value will remain valid, it is necessary to think if it is possible for the concept of value to survive without a market economy.

For the concept of value to be valid in the communist society, there must be some kind of mechanism to measure the "value" of labor in place of the "social process" that operated behind the producers, namely the "market economy."

I believe that this involves major unsolved theoretical questions in this area. These are questions that can only be solved as time passes and practical experiences are accumulated worldwide.

Marx based his theory of socialism and communism on scientific criticism of capitalist society and showed that capitalist society will be replaced with a higher form of society as a historical necessity. In so doing, he rejected any attempt to draw up a detailed blueprint for a future new society and instead confined his project to establishing a generality concerning how society makes progress. This is what his theory on socialism and communism is about. Marx maintained a general view that this question should be elaborated by future generations as they carry out practical activities in which they will accumulate and learn from various experiences.

Lenin liked this way of thinking by Marx and said, "Marx did not commit himself, or the future leaders of the socialist revolution, to matters of form, or ways and means of bringing about the revolution."

I think we must bear in mind that we are the protagonists in the effort to create a new society.

This course has a universal nature.

Before concluding my lecture, I would like to stress that nothing about "socialism through a market economy" came to Marx's mind; it was born out of needs on the ground. I said earlier that this is a "new historical challenge." It is also a new theoretical challenge.

Broadly speaking, it shows that has universality. No one would doubt that highly developed capitalist countries like Japan will face similar issues in future. When governments striving toward achieving socialism are established in these countries and start making progress toward that goal, they will create a socialist sector within the market economy. The rationality and superiority of the socialist sector will be tested in the market economy and will increase its importance and effectiveness. The process and form of progress in that process will differ from one country to another. Nevertheless, the basic course "through a market economy to socialism" will be common among many countries.

I will carefully follow your present efforts and experiences. There can be zigzags, success, and failures. I will continue to study what you are pursuing in conjunction with a future Japanese society we are envisaging. Thank you for your attention.